The Great Deformation: The Corruption of Capitalism in America

The Great Deformation is a searing look at Washington, D.C.’s part in America’s recent financial crises and fiscal cliffs.

Author David A. Stockman, a former Reagan economic architect, shows how political decision-makers—especially the Federal Reserve—have succumbed to crony capitalism and learned to love fiscal stimulus, monetary central planning, and financial bailouts.

These forces, Stockman writes, have left the public sector teetering on the edge of political dysfunction and fiscal collapse and have caused private enterprise to morph into a something resembling a speculative casino that swindles the masses and enriches the few.

Defying right- and left-wing talking points, Stockman provides a catalog of corrupters (and defenders) of sound money, fiscal integrity, and free markets.

The former includes:

  • Franklin Roosevelt, who he says fathered crony capitalism;
  • Richard Nixon, who he says destroyed national financial discipline and the Bretton Woods gold-backed dollar;
  • Fed chairmen Greenspan and Bernanke, who he says fostered our present scourge of bubble finance and addiction to debt and speculation;
  • George W. Bush, who he says repudiated fiscal integrity and ballooned the warfare state;
  • Barack Obama, who he says revived failed Keynesian “borrow and spend” policies that have driven the national debt to perilous heights.

Here’s Stockman addressing the Cato Institute on the main points of his book:

By contrast, The Great Deformation also looks at those who championed balanced budgets and financial market discipline, including Carter Glass, Harry Truman, Dwight Eisenhower, Bill Simon, Paul Volcker, Bill Clinton, and Sheila Bair.

Stockman’s analysis skewers Keynesian spenders and GOP tax-cutters alike, showing how they converged to bloat the welfare state, perpetuate the military-industrial complex, and deplete the revenue base—even as the Fed’s massive money printing allowed politicians to enjoy “deficits without tears.”

But these policies also have fueled new financial bubbles and favored Wall Street with cheap money and rigged stock and bond markets, while crushing Main Street savers and punishing family budgets with soaring food and energy costs.

The Great Deformation explains how we got here and why these warped, crony capitalist policies are giant threats to free-market prosperity and American political democracy.

Check out this longer address from Stockman on the particulars of his book: